The Financial Sector

[Vlerchan]

"During the past two decades, a profound inversion has occurred in the governing values of US economic life and, in turn, captured politics and elite discourse – the triumph of finance over the real economy. In the natural order of capitalism, the financial system is supposed to serve the economy of production – goods and services, jobs and incomes – but the narrow values of Wall Street have become the master."

The Nation (2003)

I ask readers to respond to this statement - and then offer their own opinion on the financial sector and what it's role should be.

[dxcxdzv]

Link?

"During the past two decades"
Is he referring to the emergence of Internet?

"the triumph of finance over the real economy"
I get what he means but it is quite badly said.
The aim of finance is to (spoiler alert) finance.

"the financial system is supposed to serve the economy of production [...] but the narrow values of Wall Street have become the master."
Uugh, by narrow values of Wall Street what does he mean? Banks? Nasdaq 100? Daily volume of the NYSE?
This isn't clear at all but I suppose he means that financial markets have drifted away from providing financing solutions to sort of complicated exchanges of capital and only capital.

I'm not a pro in historical finance but I'd like to know at what moment in the US history finance had not a major role over "real economy" (I don't really like this expression, damn).

And if there is something bad about all of this it's probably the lack of transparency that permits to some actors (hello the banks) to do highly complicated financial montages in the gray area.

[Porpoise101]

Currently, the thing I don't like about the financial sector is that it is opaque, cliquish, and exclusive. It breeds elitism and allows for a detachment from the rest of the society. My cousin is a banker in India and he has become very different from his job.

As for the above statement, I believe that the financial sector is maybe better than ever at moving money around because of computers and automation.

[DriveAlive]

I too find the quote poorly worded and lacking substance. Obviously, the Internet has made financial transactions easier, so it should come as not surprise that the volume of those transactions has also increased.

[Vlerchan]

Link?
It was a quoted piece from a Distributionist's political thesis, and there is no more meat to be had. Here's (https://www.thenation.com/article/bubble-capitalism/) where it's originally from.

I'm quoting it, because whilst it seems scarce on details, I'm quite sure it's meaningful to the pro-Sanders demographic.

As for the above statement, I believe that the financial sector is maybe better than ever at moving money around because of computers and automation.
I work in an investment bank that has started to make Ireland great again, and inshore from India, where it's operations were formally quite manual. In the last month, I believe my team alone has removed about 4.5 days worth of work, per month, through the automations we've programmed.

It makes way more difference than I ever realised before entering the industry.

---

I also believe he's also discussing deregulation, though finance-capital did undoubtedly come to play a much greater role in our societies since the 1980s (just check bank salaries).

[sqishy]

Vlerchan

You know my relative lack of concentration and knowledge in economics and its interaction with other things, but I'm entering anyway (you get more responses too so we're all happy).

Just wondering if you want to see if there are others around with your opinion on this quote. I could do the same with certain topics.


During the past two decades, a profound inversion has occurred in the governing values of US economic life and, in turn, captured politics and elite discourse – the triumph of finance over the real economy.


I don't know much about the past 20 years in the economic realm, but I don't get what is meant by the 'triumph' of finance over the 'real' economy. Real as opposed to virtual? Vague?



In the natural order of capitalism, the financial system is supposed to serve the economy of production – goods and services, jobs and incomes – but the narrow values of Wall Street have become the master.

If this is showing a view that the large-scale economic structures are meant to follow and serve from the fundamental small-scale structures, then I might agree, but I'm confused with the mention of this and 'the natural order of capitalism'.

[dxcxdzv]

I honestly don't get where this guy tries to bring the reader.

 Who really owns the corporation (clearly it’s not the shareholders) [...] ?
Am I the only one who wonder where does the heck this statement come from and what is it funded on?

I also believe he's also discussing deregulation
Actually he is probably discussing the whole part of the financial system which the role is not to finance enterprises and maintain a good economic climate through exchanges (pretty sure he is not criticizing the corporate bond market, for example) but rather the use of some derivatives like CFDs (which are better known for being instruments of speculation rather that anything else).
To be clear I think he is discussing anything that doesn't contribute concretely to the "economy of production" and how a financial contagion can literally wipe out a country's economy.
But the way he presents it is... pretty clumsy. Like, putting everything in the same basket.

[Hyper]

Isn't he just talking about the speculative market being bigger than the sector of the economy that actually produces physical goods.

[dxcxdzv]

Isn't he just talking about the speculative market being bigger than the sector of the economy that actually produces physical goods.
Problem here is that the guy gives absolutely no definition of what he is criticizing.
Either he doesn't know what he is criticizing or he is too lazy. Or perhaps he is a master poet sent by God and the meaning of his words is a deep mystery.